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April 13, 2024
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Air India has signed leases and letters of intent for 25 Airbus narrowbody and five Boeing widebody aircraft to augment its existing fleet in the near term. The airline, which is now owned by Tata Sons, will be inducting new aircraft after only limited fleet renewal in the past two decades. While still under government control, the airline had ordered 111 aircraft including 68 Boeing aircraft and over 40 Airbus aircraft in 2006. Air India grows fleet with 25 A320neo family and 777LR aircraft.

The aircraft being leased now include 21 new Airbus A320neos, four A321neos, and five second-hand Boeing B777-200LR long-range aircraft. “After a long time without significant growth, Air India is delighted to resume expanding its fleet and global footprint. These new aircraft, together with existing aircraft being returned to service, address an immediate need for more capacity and connectivity and mark a strong step forward. Air India has exciting expansion and renewal plans, of which these new aircraft are just the beginning,” said Campbell Wilson, Chief Executive Officer and Managing Director of the airline.

The announcement of new aircraft joining the fleet from late 2022 will increase the airline’s fleet by over 25 percent. The acquisition comes about nine months after Tata Sons took over the reins of Air India in January this year. Tata Sons was announced the winner of the government bid to privatize Air India in October 2021 but it formally took charge only in late January this year.

“Not counting the ten long-grounded narrow-body and six widebody aircraft that have been returned to service in recent months, these new aircraft mark the first major fleet expansion since Air India’s acquisition by the Tata Group earlier this year,” the airline said in a statement. It didn’t disclose the names of the lessors.

777s will be used on routes to the US

The B777-200LRs will join the fleet between December and March next year and will be deployed on routes from Indian metro cities to the United States. Mumbai will see the addition of flights to San Francisco as well as to both the New York area’s international airports, Newark Liberty and John F Kennedy. Bangalore will have a three-times-a-week service to San Francisco. These aircraft will result in Air India offering Premium Economy on its long-haul flights for the first time.

Air India’s decision to lease wide-body aircraft comes at a time when the Indian government has been stressing the need for Indian carriers to work towards getting a greater share of the number of Indians traveling abroad. It is estimated that only 36 percent of international air traffic to India goes to Indian carriers, while over 60 percent of the revenue generated on these routes goes into foreign hands.

A320neo family deployed on domestic and regional routes

The four A321neo’s, of which it already has fourteen in its fleet, are expected to join the Air India fleet in the first quarter of 2023, while the 21 A320neo’s (of which it has 27) will be inducted in the second half of 2023. These aircraft will be deployed in domestic sectors as well as on short-haul international destinations. What this means is that Air India will deploy these newly inducted aircraft on routes from India to South East Asian destinations like Singapore, Bangkok, Kuala Lumpur, Colombo, Dhaka, and Dubai. These aircraft will also allow Air India to carry more passengers between the metro cities domestically on every flight.

Currently, Air India’s narrow-body fleet currently stands at 70 aircraft, of which 54 are in service while the remaining sixteen aircraft will progressively return to service by early 2023. Similarly, Air India’s widebody fleet currently stands at 43 aircraft, of which 33 are operational. The rest will return to service by early 2023. The 777 fleet already includes three -200LRs and thirteen -300ERs.

Air India’s announcement of acquiring new aircraft could be the first indication that Vistara is also becoming part of the Air India group which at the moment consists of AirAsia India, Air India Express, Air India, and Vistara a joint venture between Tata Sons and Singapore Airlines as separate entities. Vistara operates with a four-class cabin configuration including premium economy. It is the only Indian carrier to offer this class of seating. Air India does not offer premium economy but only has economy and business class on domestic flights and economy, business, and first-class on its international flights.

New aircraft will improve fleet quality

Commenting on the lease, Satyendra Pandey, Managing Partner, Aviation advisory firm, AT-TV says that this capacity enhancement will help Air India with overall capacity albeit incrementally. “It also addresses two key concerns that are internal and external to Air India. Namely fleet economics and the on-board condition of aircraft,” he points out.

Pandey is of the view that looking at the split between Original Equipment Manufacturers (OEMs) and the type of aircraft, Air India has also factored in its current operational strengths including trained staff, parts pool, and familiarity with the asset type(s). “However, this may change going forward,” he adds saying that in a business with razor-thin margins, the newer fleet will help with efficiency and with additional capacity in slot-constrained airports. As sustainability and emissions norms also become key focus areas, the newer fleet is better positioned to deliver on these.

“While the costs of these leases remain confidential, it can be safely assumed that the terms will translate into better economics on a per seat mile basis. To be sure this is bridging capacity as production slots are hard to come by at the OEMs,” he says. Pandey fully anticipates a large order from Air India which will drive it towards a complete fleet renewal. The airline has been looking at the Airbus A350 when it toured India in June. He points out that at present the airline has gone in for a dry lease of aircraft. A dry lease is when an aircraft is leased without crew.

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Former Senior Deputy Editor at Business Line (aka The Hindu Business Line)

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